IL&FS to sell custody & depository unit
ISSL), on the block almost five years after IndusInd Bank pulled out of a deal to acquire the entity following the collapse of the infrastructure financier in September 2018.
Unlike last time, however, bidders can either bid for the custody business or the depository (brokerage) business separately or both together, a document seeking expressions of interest (EOI) showed.
ISSL is a rare non-bank custodian that holds financial securities like stocks, bonds or gold for safekeeping. It also has a separate depository licence that allows it to offer brokerage services.
«ISSL is neither a big depository nor a custodian; so there is not much business to be gained.
But it is a rare non-bank entity that has both licences and is available for sale,» said a person familiar with the industry.
«The Reserve Bank of India has long ago discontinued giving new custodial licences to non-banks; so in that sense that could be an attractive proposition for an entity seeking to build this business either on its own or along with a brokerage,» said the person cited above.
ISSL is among the 17 SEBI-registered custodians in India. IL&FS owns an 81% stake in the company.
With average assets under custody (AUC) of around ₹9,000 crore and 1,700 clients, ISSL's business is small in comparison with that of market leader Stock Holding Corporation of India (SHCI), which services millions of retail and institutional clients and has an AUC of more than ₹34 lakh crore.
On the depository side, it has more than 90,000 accounts.
Zerodha, by contrast, has 2.9 million monthly active clients.
«On the business side, it is inconsequential in the market but it has a base that can be built on provided the new buyer invests. The dual licenses are the only thing
